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Uncertainty prevails everywhere, says Draghi, but apparently investors don’t mind

According to European Central Bank President Mario Draghi “uncertainty prevails everywhere” but apparently investors don’t mind. Market participants shrugged off last weekends “no” to constitutional reform in Italy and the subsequent resignation of Prime Minister Matteo Renzi to push European indices to 12 month highs this week.

The Swiss Market Index followed European markets higher. The German DAX and France’s CAC both hit one-year highs. The gains were largely attributed to the European Central Bank’s decision to extend its quantitative easing programme by an extra nine months on Thursday.

 

ecb-swiss-market

Economic Data

President Draghi announced that the ECB Governing Council will extend its quantitative easing program till December 2017 but at a slower speed of 60 billion euros ($65 billion) a month from 80 billion euros currently. Investors cheered the promise of continuing cheap money in Europe, since the Federal Reserve is expected to tighten monetary policy in the US later this month.

SMI vs. MSCI World

(see more posts on MSCI World Index, SMI Swiss Market Index, )
SMI vs. MSCI World, December 09

- Click to enlarge

Closer to home, the Swiss National Bank announced that its foreign-currency reserves jumped last month to the most in absolute terms for 2 years. The bank announced that reserves increased to levels not seen since the institution was intervening to defend its currency cap against haven flows in late 2014.

SMI vs. MSCI World Week, December 09

(see more posts on MSCI World Index, SMI Swiss Market Index, )
SMI vs. MSCI World Week, December 09

- Click to enlarge

Swiss Economic Data

On Thursday, the Swiss Federal Statistics Office announced that it was cutting its 2017 inflation forecasts to 0%. This came days after it was announced that Swiss consumer prices fell 0.2% in November. Deflation remains a risk to the Swiss economy with the annual inflation rate coming in negative for the past 28 months, while economic activity continues to stagnate.

Swiss Bonds and FX

Swiss Bonds and FX, December 09

- Click to enlarge

 

Swiss Bonds and FX

Swiss Bonds and FX, December 09

- Click to enlarge

Swiss Companies

In company news, Credit Suisse shares jumped nearly 14% this week after Chief Executive Officer Tidjane Thiam pledged to cut an additional 1 billion Swiss francs in expenses over the next 2 years. Thiam also lowered profit targets but declined to give details on any potential job cuts.

Swiss Companies

Swiss Companies

- Click to enlarge

Swiss Companies

Swiss Companies, December 09

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Full story here
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Investec
Investec is a distinctive Specialist Bank and Asset Manager. We provide a diverse range of financial products and services to a niche client base in three principal markets, the United Kingdom, South Africa and Australia, as well as certain other geographies. Investec’s strategic goals are motivated by the desire to develop an efficient and integrated business on an international scale through the active pursuit of clearly established core competencies in the group’s principal business areas.
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